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June 16, 1997
(Forest Resources and Agrifoods)

 

Divestiture of Newfoundland Farm Products Corporation

Beaton Tulk, Minister of Forest Resources and Agrifoods, today announced that government and the Board of Directors for Newfoundland Farm Products Corporation (NFPC) reached agreement with Integrated Poultry Limited for the sale of the Newfoundland Farm Products Corporation plant in St. John's.

Newfoundland Farm Products Corporation, and the operating subsidy required to keep the chicken processing facilities operational, has been an ongoing source of concern to successive governments. A primary consideration has been to find a solution to the future NFPC operations which would, to the maximum extent possible, protect the 500+ jobs involved in the chicken processing industry across the province. As well, this government wanted to secure and sustain the integral role of the chicken industry in the overall livestock sector of the agriculture industry in the province. The feed requirements of the chicken industry represent approximately 45 per cent of the total feed requirements in the province. Therefore any change would have a potential significant impact on the cost of feed for the remaining livestock industry.

As well, a primary objective has been to eliminate direct government financial participation in the chicken production and processing industry. This government has been firm in re-evaluating it's fiscal priorities, and the choices about where to invest taxpayers money must be made carefully. Government can no longer afford to inject major financial support to an industry that clearly belongs in the private sector. Government should not be in the chicken processing business. It is imperative that government focus its resources on priorities such as, health care, education, and social safety nets, that are for the greater public benefit.

"I am happy to say that the agreement we have reached with IPL accomplishes all these objectives," said the minister. "It remains for IPL to finalize the necessary capital financing arrangements over the next 45 days."

As of Tuesday, June 17, IPL will take over all aspects of NFPC's operation at the St. John's plant for an interim period of up to 45 days. During that period any financial losses experienced will be shared equally between NFPC and IPL. IPL has requested this interim period to allow them time to finalize the capital financing requirements for their proposal for a fully integrated chicken production and processing operation. This proposal involves fully integrating the chicken industry from hatchery to the sale of the final processed product. It is only through this integrated approach that IPL can realize the efficiencies necessary to be financially viable.

IPL and the Newfoundland Association of Public Employees have successfully negotiated a new collective agreement which will come into effect immediately when IPL takes possession of the plant.

Discussions between IPL and financial institutions, including the federal Farm Credit Corporation, are currently underway, therefore, the full terms of the acquisition proposal cannot be released. However, these details will be made available at the time the final sale arrangements are in place.

"We have every belief that government is giving the chicken industry a new beginning with IPL," said the minister. "This decision represents government's attempt to preserve the remaining 400 plus jobs in the chicken industry for the long-term. These jobs will become more viable, more secure, by having a private sector operator such as IPL responsible for the chicken processing facility."

Contact: Anna Buffinga, Communications, (709) 729-3750.

1997 06 16   3:20 p.m.

Mr Tulks Speech


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